European Union: Court Of Justice Of The EU Ruled On The Use Of Trade Marks As Indication Of Quality

Court of Justice of The EU Ruled on Trade Marks Used Only to
Indicate Quality Standards

Trade marks will not only be associated with the company they
origin from, but might also be associated with certain quality or
ethical standards. Certain associations are using their trade marks
only to license it to producers who fulfill a certain standard.
While some jurisdictions recognize such use of a trade mark as
sufficient to maintain trademark protection, the European Union
Trade Mark Regulation (EUTMR) does only mentioning
the term "genuine use" of a trade mark. On 8
June 2017, the Court of Justice of the European Union
(CJEU) has decided whether using a trade mark only
to indicate certain quality or ethical standards can be seen as
"genuine use".

The Facts

The Verein Bremer Baumwolle (VBB), an
association under German law, owns an individual European Union
trade mark (EUTM) displaying a cotton flower. The
VBB concludes license agreements under this trade mark with
associated producers of textiles who oblige themselves to comply
with certain quality standards concerning the cotton they use. The
defendant, a German manufacturer of textiles, displayed this trade
mark on its products without having an appropriate license to do
so.

VBB sued the defendant for trade mark infringement. The
defendant brought a counterclaim for declaration of invalidity of
this trade mark. In first instance the Düsseldorf District
Court found infringement , but the Düsseldorf Court of Appeals
referred the case to the CJEU with the following questions: Is the
use of a trade mark as a label for quality a "genuine
use" in regards to an individual trade mark? Must such a trade
mark be declared invalid, if the holder of said trade mark does not
ensure the quality standard by carrying out periodic quality
controls?

First Question

According to the CJEU, the essential function of a trade mark is
to guarantee that all goods or services marked by the sign come
from the same undertaking or economically linked undertakings. It
might be a secondary purpose of a trade mark to ensure a certain
quality, but the "genuine use" of a trade mark
is only to guarantee that the goods origin from the same or an
economically linked entity. Therefore, the proprietor is not using
the trade mark in terms of the EUTMR, if it is only licensing the
trade mark to ensure a certain quality. This is particularly
relevant, because, if there is no "genuine use"
of a trade mark for five years, the trade mark proprietor might
face an application for revocation of its trade mark.

Second Question

In relation to the second question, the CJEU stated that an
individual trade mark is not to be declared invalid, if the
proprietor does not conduct quality controls on a regular basis.
While this is a reason for invalidation of collective trade marks,
it cannot be applied to individual trade marks because these trade
marks are not designed to guarantee a certain quality standard.
Individual trademarks might be declared invalid, however, if the
public is made to believe that there will be quality controls while
the trade mark proprietor never intended to conduct them.

Background

The judgment is apparently guided by the fact that the EUTMR
provides two specific instruments to mark products that come from
certain undertakings. There is the possibility to file a collective
trade mark to display that the user of the trade mark is a member
of a certain association that follows certain standards. Further,
as of 1 October 2017, a certification trade mark could be used to
show that certain standards are met. The CJEU apparently tries to
ensure that individual trade marks cannot be used to circumvent the
requirements for collective and certification trade marks.

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Dylan Thomas might well have appreciated the irony of a cropped version of his wedding photograph in 1947 being used to advertise Welsh holiday cottages.

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